Cash Rent vs Online Payment: Which Option to Choose?
When it comes to managing your rental properties, it’s best to work with an experienced property manager. They will oversee almost all aspects of your property, from marketing your vacant units to screening for quality tenants down to maintaining the properties. Sure, property managers may wear various hats, but one crucial aspect is how they collect monthly payments from your tenants. Funds are the lifeblood of your rental business, which is one of the reasons you are having your units rented in the first place.
As far as the rent payment collection is concerned, your property manager may take two routes: cash rent or online payment. However, which option is better? Keep on reading to find out more.
Cash rent vs online payment
With cash rent, your hired manager will have to go from door to door to obtain cash from the tenants for the monthly rent payment. With online payment, on the other hand, tenants can pay online using PayPal, Automatic Clearing House (ACH), or money orders and cashier’s checks. All your property manager has to do is to check your bank account and see whether or not the payments are in.
The drawbacks of accepting rent in cash
For the most part, property managers are much better off collecting lower-risk forms of payment. Here are some of the major drawbacks of accepting rent payment in cash:
Lost cash: There’s a possibility that the money will get lost before you can even have them deposited. The challenge, however, is if your property manager is holding a huge sum of money collected from tenants and those funds go missing.
Stolen cash: Apart from lost cash, it’s easy for the money to get stolen as well. Even before your manager will have them deposited, they may be stored somewhere in your property. The least you would want to happen is for your money to get stolen without you even realizing it.
Illegal activity: There might be some illegal activities involved in a cash payment. These payments may have been asked to be delivered to your property manager, only to find out they are less than expected.
The advantages of accepting online payments
When it comes to online payments, it’s inevitable to have some drawbacks. These include the payment processing fees and disputed payments and chargebacks. For the most part, however, your hired property manager can take advantage of the following with online payments:
Convenience: Paying online is more convenient for the tenants and your property manager. Tenants simply have to log in online and make the necessary transaction on the chosen payment platform. Your manager also won’t have to deposit the cash because they can simply track the payments online.
Increased security: There is increased security in accepting payments online than to carry a bulk of payments, which can get lost or stolen somewhere along the way.
Less late payments: This is particularly true if your tenants are set-up for recurring payments. They don’t need to worry about making late payments. The convenience that comes with online payment can help tenants pay on time.
As you can see, online payment outweighs any benefits of cash rent. If you are working with a property manager, make sure to discuss which payment collection scheme you and your manager plan to set, as long as it’s the best option for your setting.
We’re a property management company in New York City, offering innovative real estate solutions to property owners and investors. If you need a property manager who can deal with the collection of rent payments, get in touch with us today to see how we can help!